Local developer Robert Green easily recalls the day five years ago when, standing on an empty lot in the Gaslamp Quarter, he pitched the founder of Montage Hotels on making San Diego the first home for its new luxe brand.

“He and his wife drove down to the property on Memorial Day weekend and we met at the site at 10 in the morning on a Sunday,” Green said of his meeting with Montage executive Alan Fuerstman. “We stood on the corner of 5th and J, and he looked at me and said, ‘We have to do this. This is the perfect place to launch the new brand.’”

Fuerstman remembers it much the same way, smitten immediately, he said, by the site’s close proximity to Petco Park and the convention center just across Harbor Drive.

“I fell in love with the opportunity right away, the vibrancy of Gaslamp, it being steps from the ballpark,” enthuses Fuerstman. “From that moment, I was committed to bringing it to life.”

The official opening this weekend of the company’s first Pendry hotel brings to fruition Montage’s business strategy to build on its well-regarded reputation for luxury lodging by offering a hipper, less high-priced version of its signature properties located in affluent ZIP codes like Beverly Hills and Laguna Beach.

There’s more to the Pendry, though, than a pampered overnight stay. No less than six food and drink venues populate the property, from from its all-day eatery and double-duty wine and coffee bar (think espresso and gelato) to a fine dining restaurant and elegant basement nightclub, glamorized with a huge crystal chandelier.

A pool deck with views of the Gaslamp will likely be a popular gathering spot for evening cocktails during the summer, while a street-level beer hall, complete with a beer pong table, shuffleboard table and 34 beers on tap, will be a natural draw during baseball season.

While downtown San Diego is no stranger to upscale lodging, the 317-room Pendry boasts the cachet of the Montage affiliation and its exacting service standards.

The more than $120 million project, under construction for more than two years, also arrives at a propitious time, when luxury lodging is outperforming the hotel industry as a whole. Where all hotels in the U.S. ended 2016 at an average 65.5 percent occupancy, the luxury segment came in at 74.9 percent, according to CBRE Hotels, which tracks performance in the hospitality sector.

At the same time, though, hotels in the luxury and upscale sectors will see the biggest increase in competition this year, which will mean lower gains in revenues, a CBRE forecast concludes.

K.C. Alfred / San Diego Union-Tribune

Alan Fuerstman, founder of Montage Hotels, and son Michael, who is overseeing the new Pendry brand, stand in one of the hotel's 36 suites.

Alan Fuerstman, founder of Montage Hotels, and son Michael, who is overseeing the new Pendry brand, stand in one of the hotel's 36 suites. (K.C. Alfred / San Diego Union-Tribune)

Fuerstman and his son Michael, who is overseeing the rollout of the Pendry hotels, deliberately avoid invoking the oft-referenced millennial generation when they talk about Pendry’s targeted guest, but do acknowledge they’re appealing to a younger demographic than the typical well-heeled Montage guest.

They also try to differentiate Pendry from the conventional boutique hotel by throwing out labels like “new luxury” and “luxury lifestyle.”

“This is a new interpretation of Montage,” explains Michael Fuerstman. “The new generation of a luxury customer is not really age-specific. It’s a customer who’s matured in a way to appreciate art, architecture, design, bold experiences. The customer is well traveled, has stayed in luxury hotels and boutique lifestyle hotels and wants a little bit of both.”

Leading a visitor around the imposing 12-story building, cloaked in brick and plaster, Fuerstman uses adjectives like sexy, awesome, plush to describe the well-appointed guestrooms and public spaces.

Floor-to-ceiling windows in some of the suites showcase views of the skyline and bay. An oversized chandelier and 20-foot-high glass-enclosed greenhouse elevate the ambience of the hotel’s three-meal-a-day restaurant Provisional. Plush, deep blue couches, Persian rugs and hardwood floors in the underground Oxford Social Club evoke the feel of being at “someone’s really amazing house party,” Fuerstman says.

K.C. Alfred / San Diego Union-Tribune

Pendry hotel pool deck

Pendry hotel pool deck (K.C. Alfred / San Diego Union-Tribune)

Both in style and service, guests at the Pendry will notice subtle differences between it and its more luxurious sibling. For instance, guests arriving at the Montage are personally escorted to their rooms where a split of champagne is chilling. At the Pendry, they’re welcomed with a rotating signature beverage that can be spiked with alcohol if they so desire.

Rooms at the Montage will typically have two sinks, a bathtub and shower, while a Pendry bathroom has one sink, a large shower but no bathtub. Bath slippers come with a Montage room; they’re available upon request at the Pendry.

Nightly room rates at a Montage resort average $600, compared with rates in the $300’s for the Pendry San Diego.

And that, in part, is what is driving Montage’s parent company, Montage International, to aggressively pursue development of the Pendry brand.

A second Pendry is opening in Baltimore within the next couple of months, and a third is planned for West Hollywood.

“There are only a certain number of sites where you can put a Montage hotel,” said Bruce Baltin, managing director for CBRE Hotels’ Los Angeles office. “It requires high average room rates so they’re expensive to build and operate, and you can’t get those rates everywhere. San Diego is one area where a Pendry works but a Montage cannot.”

The Pendry’s Gaslamp Quarter site has something of a tortured history, beginning more than a decade ago when the city condemned and cleared the property to make way for a Marriott hotel. The move led to a protracted battle with the owner of the then Gran Havana Cigar Cafe Lounge, which had sat on the property.

Owner Ahmad Mesdaq, who ultimately was awarded $7.8 million in an eminent domain case, said at the time he spent $2 million to buy his Gaslamp location and $1.25 million to fight its condemnation.

Development of the Marriott, though, was not to be. The economic downturn stalled the planned 2008 start, and it wasn’t until 2012 that the Robert Green Co. acquired the site through a long-term ground lease.

At the time, the post-recession environment for lending on major hotel projects wasn’t exactly welcoming, but Green said that a rebounding hospitality industry gave him confidence that a financing deal could be struck. Partnering with a Montage Hotels investment group affiliate also helped strengthen the prospects for success.

While other new hotels are coming on line in downtown San Diego, including an InterContinental currently under construction near the waterfront, Green said he’s not concerned about the competition, especially given the years-long absence of any new development.

One element he believes will prove to be a big revenue generator for the Pendry are all the dining and drinking venues that should bring business to the property day and night. Given that Gaslamp is already a bustling nightlife destination, the hotel should benefit from the heavy street traffic, Green said.

“With one exception, all of our food and beverage outlets face the street,” he said. “The worst thing a developer can do is build a restaurant or bar that is stuck inside the guts of a hotel.

“The only people who will go there are those going to the hotel, whereas in our case, we have 200 linear feet on Fifth, Sixth and J Street, so we placed our food and beverage outlets on the street.”

While Montage has experience opening restaurants and bars within its properties, it needed some help in the area of more nightlife-oriented venues. Toward that end, it partnered with Clique Hospitality, whose founder, Del Mar resident Andy Masi, has opened a number of restaurants and clubs in the Las Vegas area.

“The culinary scene downtown has shifted to Little Italy so we wanted to bring it back,” said Masi. “Here’s an incredible location, and we wanted to give everyone a reason to come back to the Gaslamp.”

The venues his company will be in charge of operating are the upscale Lionfish restaurant, the nightclub, and a rooftop lounge called the Pool House that overlooks Fifth Avenue.

“We wanted to create a lively pool deck with good music and incredible food in a relaxing atmosphere,” Masi said. “We didn’t want it to be a young kind of party pool, but an oasis in the middle of Gaslamp.”

Clearly, expectations are high for the Pendry, whose operators believe its unique attributes will set it apart from other luxury properties downtown.

But there have been other highly touted hotels that have opened with much fanfare downtown only to fizzle or require a re-branding to bring them back to life, cautions Carl Winston, who heads San Diego State’s School of Hospitality.

San Diego’s only W hotel opened in 2002, drawing a crowd of 1,000 for its opening party, only to fall into foreclosure a decade later. Today it’s a Marriott-branded Renaissance.

The Sè San Diego, which boasted $500 nightly room rates and a grand penthouse with a chef’s kitchen and a rooftop patio with panoramic downtown views when it opened in 2008, filed for bankruptcy two years later. A year later it became a Kimpton Palomar hotel.

Although the luxury lodging market has sharply rebounded from those more difficult times, Winston remains somewhat skeptical.

“So luxury has been tried multiple times and over time everyone has returned to the mean — on peak nights you’ll get 300 bucks and off peak $198,” Winston said. “I question whether the business and convention traveler is seeking that level of experience.

“These other hotels at the time also said they were going to be the top of the food chain, and obviously, Pendry is a solid brand but I’ll be curious to see whether they’ll be able to crack that premium pricing code when no one else has.”

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